Down $900 Million or More, the Chairman of Bear Sells

Only a year ago James E. Cayne’s stake in Bear Stearns was worth more than $1 billion. But on Thursday, Mr. Cayne, the chairman of Bear, disclosed that he had sold all of his shares in the troubled investment bank this week for just $61 million.

While the sale leaves Mr. Cayne a wealthy man, it nonetheless underscores the deep losses suffered by Bear’s shareholders after the company’s forced sale to JPMorgan Chase two weeks ago.

And for Mr. Cayne, the liquidation evokes a deep sense of loss. It represents a humiliating capitulation for a brash executive who, with his ever-present cigar, suspender-snapping ways and Friday golf outings in the summer, epitomized the classic, if outdated, picture of the Wall Street chieftain.

To the end, Mr. Cayne heeded the advice he often gave his colleagues at Bear: hold on to your stock. Whether the stock was flying high, as it was early last year, at $171, or plummeting, as it did in recent months, Mr. Cayne kept the vast bulk of his 5.6 million shares.

The sale, made on Tuesday, according to a securities filing, represents a final severing of ties with the firm where the 74-year-old Mr. Cayne has worked since he joined as a broker in 1969.

Mr. Cayne did not return a telephone message seeking comment about his share sale.

While he still comes into his office suite in Bear Stearns’s headquarters on Madison Avenue, Mr. Cayne has not been an active participant in the talks between JPMorgan and Bear executives on broad issues of integrating businesses and identifying which bankers stay and which go. JPMorgan this week quintupled its original offer for Bear, to $10 a share, in an effort to win over shareholders. The shares closed at $11.23 on Thursday, up 2 cents.

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James E. Cayne, the Bear Stearns chairman, sold his shares on Tuesday.Credit
Oscar Hidalgo/The New York Times

He has kept a very low profile, people inside Bear say. Last week, when James Dimon, the chief executive of JPMorgan, addressed top Bear executives in a contentious 90-minute meeting, Alan C. Greenberg, Mr. Cayne’s predecessor as chairman and chief executive, welcomed Mr. Dimon with a handshake. Mr. Cayne, who knew Mr. Dimon well and even discussed a possible merger with him while he was at Bank One, was not easily seen, according to people who were there.

“How could he be in the room?” asked one Bear banker, who declined to be identified because he did not wish to speak publicly about Mr. Cayne, when asked why Mr. Cayne was hard to spot at the meeting.

Within Bear, a man who was once respected has now become a whipping boy for many furious employees who blame him for not selling the firm when he had the chance and not seeking a cash infusion in the months after the company’s hedge funds collapsed and Bear’s capital position became increasingly precarious.

And while he is for the moment still chairman of the Bear Stearns board, Mr. Cayne is not expected to join the JPMorgan board after the merger.

People who have spoken with Mr. Cayne say that he, like everyone at Bear, was stunned by the firm’s precipitous collapse and the rock-bottom price of its sale. In the past weeks, together with his wife, Patricia Cayne, who is a student of Jewish religious traditions, Mr. Cayne has spent considerable time searching for comparable events in religious history to see what lessons can be learned from the collapse of his firm, said a person who has spoken to him recently.

While he has not yet moved into his new apartment at the Plaza, which he bought for about $26 million this month, people who have spoken with him say he still has plans to do so, as soon as he sells his current residence on Park Avenue.

While Mr. Cayne has not publicly said why he sold his shares, people who know him say that it suggests a need to separate himself, emotionally as well as financially, from the firm that for so long had been part of every fiber of his being and that now had become a source of pain and disappointment.

Mr. Cayne, unlike many lower-level Bear executives who had large portions of their net worth tied up in stock, also had the benefit of receiving large portions of his yearly compensation in cash. So, he has certainly accumulated enough to live out his retirement years in comfort.

A version of this article appears in print on , on page C1 of the New York edition with the headline: Down $900 Million or More, The Chairman of Bear Sells. Order Reprints|Today's Paper|Subscribe